Gantry Acquisition Corp v Parker & Parsley Petroleum Australia Pty Ltd

(1994) 51 FCR 554

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(Judgment by: Sheppard J)

Gantry Acquisition Corp
vParker & Parsley Petroleum Australia Pty Ltd

Court:

Judges:
Sheppard JBurchett J
Beazley J

Subject References:
Corporations
Takeovers
Whether Pt A statement deficient
Whether failure to set out particulars of offeror's intentions regarding continuation of business of target company
Whether breaches es-tablished
Consideration of proper approach to construction of Corporations Law provisions
Corporations Law ss 698, 731, 739, 743, 750

Legislative References:
Corporations Law - s 698; s 731; s 739; s 743; s 750

Case References:
Samic Ltd v Metals Exploration Ltd - (1993) 60 SASR 300
Sagasco Amadeus Pty Ltd v Magellan Petroleum Australia Ltd - (1993) 177 CLR 508; 113 ALR 23
ICAL Ltd v County Natwest Securities Australia Ltd & Transfield (Ship Building) Pty Ltd - (1988) 6 ACLC 467
Associated Dairies Ltd v Central Western Dairy Ltd - (1993) 11 ACLC 827
Fitzgerald-Hart v Attorney-General - [1985] 3 All ER 455
Re Paddle River Construction Ltd - (1961) 35 WWR 605
A v B - [1969] NZLR 534
Bond Corp Holdings Ltd v Sulan - [1990] 3 WAR 49
Re Karounos Ex parte Official Trustee in Bankruptcy - (1989) 89 ALR 580
Jolly v District Council of Yorketown - (1968) 119 CLR 347
House v R - (1936) 55 CLR 499
Neil v Nott - (1994) 121 ALR 148

Hearing date: 4 July 1994
Judgment date: 20 July 1994

Sydney

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Judgment by:
Sheppard J

On 4 July last we announced that this appeal would, by majority, be dismissed. We said that we would publish our respective reasons for our conclusions. My own conclusion was that the appeal should be dismissed. What follows are my reasons for that conclusion.

The order made by the primary judge (Davies J) was made by way of final relief. It restrained the appellant from sending to any shareholder of Bridge Oil Ltd a Pt A statement which was registered on 23 June 1994 and from sending, issuing or otherwise proceeding with any offer to which the Pt A statement related.

Both parties have made offers for the acquisition of the entirety of the shares in Bridge Oil Ltd. The respondent's offer has risen from an initial price of 70 cents per share to 90 cents per share. The period during which the offer may be accepted has been extended to 13 July 1994. The offer made by the appellant stood at 85 cents per share at the time of the proceedings before Davies J and before us. Subject to Davies J's decision, it would have been possible for the appellant to increase its price if it had decided to do so.

On 27 June 1994 the respondent purchased 52.7 million shares in Bridge Oil on the market. It then became entitled in all to 78.6 million shares which represents approximately 18.7% of the total shareholding.

The ground of the primary judge's decision was that the appellant's Pt A statement infringed certain of the provisions of s 750 of the Corporations Law. Clause 20 of that section, in so far as it applies to Pt A statements, is as follows:

(1)

The statement shall set out particulars of the offeror's intentions regarding:

(a)

the continuation of the business of the target company;

(b)

any major changes to be made to the business of the target company, including any redeployment of the fixed assets of the target company; and

(c)

the future employment of the present employees of the target company.

(2)

Without limiting the generality of subclause (1), if the offeror has not made a decision on a matter referred to in paragraph (1)(a), (b) or (c) but is considering a possible course of action, or 2 or more possible courses of action, in relation to that matter, the statement shall set out that fact and specify the course of action or courses of action concerned and the reason why the offeror has not made a decision on the matter.

Reference should also be made to cl 17 which is in the following terms:

17. The statement shall set out any other information material to the making of a decision by an offeree whether or not to accept an offer, being information that is known to the offeror and has not previously been disclosed to the holders of shares in the target company.

Paragraph 15 of the appellant's Pt A statement is as follows:

15.1 Gantry intends to proceed to compulsory acquisition of all outstanding Bridge Oil shares immediately upon it becoming entitled to do so as a consequence of acceptances of the offers.

Gantry intends ultimately to concentrate its activities to within the USA. Consequently, Gantry intends to cause Bridge Oil to divest its non-US operations and assets at an appropriate time and on the most favourable terms. Options under consideration are sales of assets in whole or in part, and a possible

Australian public offering of all or a portion of the non-US operations and assets. Gantry has not made a decision in respect of those options because it is not yet in possession of sufficient information necessary to make such a decision. Any decisions in relation to the non-US operations and assets would be determined after Gantry has examined those operations and assets and further considered its position and will be evaluated in light of prevailing market conditions. Gantry intends that the non-US operations and assets would continue to be managed in the best long term interests of those operations and assets.

Gantry intends to cause BOUSA to sell to Cactus Hydrocarbons III, a limited partnership in which Enron Cactus III Corp is the general partner, a term overriding royalty interest (a real property interest in leases, entitling the holder to ownership of the oil and gas in the ground) in its South Texas oil and gas leases for a purchase price of approximately US$60 million.

Gantry has disclosed specific intentions in relation to the executive group in paragraph 4.2 of this statement.

15.2 Subject to paragraph 15.1, Gantry:

(a)

intends to continue the business of Bridge Oil and its subsidiaries;

(b)

does not intend to make any major changes to the business of Bridge Oil and its subsidiaries or to redeploy the fixed assets of Bridge Oil and its subsidiaries; and

(c)

intends to continue the future employment of the present employees of Bridge Oil and its subsidiaries.

With para 15 should be read paras 4.1 and 4.2 which are as follows:

4.1 The principal activities of Gantry are to acquire Bridge Oil Shares.

4.2 Gantry is presently wholly owned by Gantry Corp. The principal activities of Gantry Corp are to hold the issued capital of Gantry.

Gantry Corp has entered into an agreement with five incumbent executive officers of BOUSA, George G Fenton, Timothy R Dunn, Robert W Oliver, Tom C Langford and Mark D Krahenbuhl (the executive group), pursuant to the terms of which, upon successful completion of the offers, the members of the executive group will become executive officers of Gantry Corp entitled to representation on Gantry Corp's board of directors and to the benefits of three-year employment agreements. The executive group will then assume positions substantially similar to those held currently with BOUSA and with substantially equivalent salaries. The agreement further provides that the executive group is obligated to purchase, upon successful completion of the offers, shares of common stock of Gantry Corp (representing approximately 1.8% of the issued capital) for consideration totalling US$1.1 million and consisting of at least US$900,000 cash, with the remaining consideration to be represented by promissory notes payable to Gantry Corp. The shares so acquired will be subject to the terms of a stockholders' agreement limiting share transfers, providing Gantry Corp with certain preferential purchase rights to shares held for sale by the members of the executive group and obligating Gantry Corp to purchase the shares of those members at rates calculated in accordance with a prescribed formula upon termination of their employment. The employment arrangements also provide for the implementation of a stock option plan and certain severance payments for the benefit of the executive group. Under the stock option plan, the executive group could acquire up to an additional 5.2% of Gantry Corp's issued capital.

George G Fenton has taken a temporary leave of absence from his position as an executive of BOUSA.

Paragraph 4 contains some other provisions not of relevance to the present problem. Its heading is ''Principal Activities''.

Additionally, it is necessary to refer to cl 17 of the Pt A statement, particularly subpara (d) thereof. Clause 17 is headed ''Other Material Information''. Paragraph 17(d) is as follows:

There is no information material to the making of the decision by a holder of Bridge Oil shares whether or not to accept an offer by Gantry, being information that is known to Gantry and has not previously been disclosed to holders of shares in Bridge Oil other than as follows or as is contained elsewhere in this statement:

...

(d) Following the announcement of an offer for Bridge Oil by Parker & Parsley Petroleum Australia Pty Ltd, Gantry understands that Bridge Oil initiated a process whereby interested parties were invited to review the assets and operations of BOUSA. In that connection, ECC, as general partner of JEDI, subject to the provisions of a confidentiality agreement with BOUSA, received information and copies of documents relating to BOUSA's operations and assets. ECC understands that BOUSA offered to make the same information and documents available to other interested parties on comparable terms, and also made all of such information and documents available to Petrie Parkman & Co in connection with the preparation of its report dated 30 May 1994, a copy of which is attached as an exhibit to Bridge Oil's Pt B statement dated 3 June 1994. ECC has evaluated the information and reviewed the documents BOUSA furnished to ECC and is not aware of any material information contained therein that is not reflected in Bridge Oil's Pt B statement dated 3 June 1994 or that has not previously been disclosed to the holders of shares in Bridge Oil.

In connection with the confidentiality agreement mentioned above, and as a further condition to BOUSA providing information to ECC in connection with ECC's review of BOUSA's operations and assets, BOUSA required ECC, acting as general partner of JEDI, to execute a letter agreement relating to employee severance benefits (the severance agreement). The severance agreement provides that if ECC or any of its affiliates (including JEDI) was to directly or indirectly acquire the assets of BOUSA or any of its affiliates, then JEDI would be required to provide specified severance benefits to any employee of BOUSA who was an employee on the date of the acquisition and whose employment by BOUSA (or the purchasing entity) terminated without cause within specified periods of time. The severance agreement applied to all employees of BOUSA on the date of any such acquisition, including the members of the executive group, each of whom has agreed to join Gantry Corp's management team upon the successful completion of the offers. ECC understands that the confidentiality agreement and the severance agreement BOUSA required ECC to execute were substantially the same as the agreements BOUSA required of other interested parties who desired to conduct a review of BOUSA's assets and operations.

Prior to committing to make the offers, Gantry entered into the agreement described in paragraph 4.2 with the members of the executive group and secured the commitment of the members of the executive group to waive the provisions of the severance agreement (as to them only) upon the successful completion of the offers. All other employees of BOUSA will be entitled to the benefits described in the severance agreement in the event they are terminated as described therein. Gantry has no plans to cause the termination of any of such employees.

In these various paragraphs the reference to BOUSA is a reference to Bridge Oil (USA) Inc, a United States corporation registered in the State of Delaware. It is a wholly owned subsidiary of Bridge Oil Ltd. JEDI is a reference to Joint Energy Development Investment Ltd Partnership, a United States Limited partnership having its registered office in Delaware. The reference to ECC is a reference to Enron Cactus III Corp refered to in para 15.1 of the Pt A statement.

His Honour concluded that para 15 of the Pt A statement did not comply with cl 20 of s 750 of the Law. He said:

In my opinion, these statements do not comply with cl 20 and are confusing.

Clause 15.1 gives very little information as to the options being considered with respect to the businesses outside the United States. It is implied in cl 15.1 that the businesses will be sold but nothing is said as to the future of the employees or as to the period of time during which the break-up will occur. Even with respect to the US businesses, it is not expressly stated that the five executive officers will continue as the chief executives of Bridge Oil USA. It is not stated as to what will occur to the employees of the South Texas field when that asset is sold. It is stated in para 17(d) that ''Gantry has no plans to cause the termination of any such employees''. But whether this relates to the employees who may be engaged in the South Texas fields is not made clear. The severance agreement is highlighted, but it is not clear to which employees it is thought that the agreement will probably apply. Nor is the temporary leave of absence of Mr G G Fenton clarified in any way. Perhaps Mr Fenton's position is a trivial matter but it is just one of the things that leaves one in doubt after reading this Pt A statement.

My major concern is para 15.2. In view of the fact that the non-Australian assets are to be disposed of in due course and that part of the American assets are also to be disposed of, presumably approximately 50% in all of the existing assets of the Bridge Oil Group, para 15.2 seems to me to be misleading. If Gantry proposes to break up and to dispose of 50% of the businesses then that should be stated positively. A reading of cl 15.2 would not suggest that that was the case.

It is true that some of the businesses and employees are not directly the businesses and employees of Bridge Oil Ltd but of its subsidiary companies. It seems to me that, having regard to the Pt A statement as a whole, the interests of those employees and the future of those businesses are relevantly material matters for the purposes of the Pt A statement.

The question which this appeal raises for decision is whether his Honour was correct in the decision which he reached.

In support of their submission that his Honour's conclusion was erroneous, counsel for the appellant emphasised the opening words of cl 20 which requires the Pt A statement to set out particulars of the offeror's intention regarding the matters in the lettered paragraphs that follow the opening words of subcl (1). They contended that what was stated in cl 15.1 gave an ample indication of the appellant's intentions so far as they could be stated and that cl 15.2 was not misleading because it opened with the words ''Subject to paragraph 15.1 ...''.

The matter which I think concerned his Honour was the positive statements in cl 15.2 that the appellant intended to continue the business of Bridge Oil and its subsidiaries, did not intend to make any major changes to the business of Bridge Oil and its subsidiaries or to redeploy the fixed assets of those companies, and that it intended to continue the future employment of the present employees of Bridge Oil and its subsidiaries. An ordinary reader of the document, for instance, one without legal training, might well take the view that these statements were, for practical purposes, unqualified. However, I think a fair reading of the document indicates to the ordinary reasonable reader that it is necessary to read para 15.1 in conjunction with para 15.2. Furthermore, a person reading the document in its entriety would come to cl 15.1 first of all and then read cl 15.2 with its opening words which refer one back to cl 15.1.

In my opinion cl 15.1 indicates the appellant's intentions with reasonable clarity. It says that the appellant intends to proceed to compulsory acquisition of all shares immediately upon its becoming entitled to do so. The fact that it may never be able to do so because of the existing holding of the respondent is not to the point. Clause 15.1 then discloses the intention ultimately to concentrate the appellant's activities within the United States. In consequence it intends to cause Bridge Oil to divest its non-United States operations and assets at an appropriate time and on the most favourable terms. Options under consideration are then referred to. These are followed by a statement that the appellant has not made a decision in respect of those options because it has not sufficient information to enable it to make a decision. Its intention is to make that decision after it has examined the non-United States operations and assets. The matter is to be further considered and is to be evaluated in the light of prevailing market conditions. To this end, the appellant intends that the non-United States operations and assets would continue to be managed in the best long term interests of those operations and assets.

Stopping there, I myself can see no problem. I agree with counsel for the appellants that one needs very much to bear in mind that it is the intention of the offeror to which cl 20 of s 750 is directed. The clause recognises that an intention about the future may not have been formed or that there may be different courses of action which the offeror may have under consideration. To my mind the statement has made it quite clear that sooner or later the appellant's preferred option is to shed the non-United States assets and to confine the company's operations to the United States.

In reaching my conclusion I have taken into account the fact that it is particulars which cl 20 requires. I bear in mind also that cl 20.2 uses the word ''specify''. Accordingly, an offeror must do the best it can to be particular and specific about its intentions. Nevertheless the document is dealing with a commercial situation. It is being delivered in a context in which the offeror does not have control of the target company. In those circumstances it is not only reasonable, it is also necessary, for it to express itself in a guarded way. If it does not do this, it runs the risk that statements it makes may, because of their very particularity, be found to have been misleading. To my mind the statements made in the offer to which I have so far referred give a fair indication to potential acceptors of the offer of what the appellant's intentions are.

It is necessary, however, to come to the next paragraph which refers to the intended sale by the United States subsidiary to the partnership Cactus Hydrocarbons III of a royalty interest in its South Texas oil and gas leases for a purchase price of US$60 million. That paragraph suggests that there is in existence an agreement, arrangement or understanding pursuant to which the intended sale is to be effected. Here I think there is a failure to particularise aspects of what is involved in the appellant's intention. The statement suggests the existence of something which may well be in writing. It does not say whether it is or not and it does not indicate the terms of the agreement, arrangement or understanding which it seems likely is in existence. It does not explain the nature of the limited partnership which is referred to nor does it indicate the significance of the fact that Enron Cactus III Corp is the general partner. The reader is not told what a ''term overriding royalty interest'' is other than that it is a real property interest in leases entitling the holder to ownerhsip of the oil and gas in the ground. Finally, there is no definition of the South Texas oil and gas leases which are to be the subject of the transfer. In addition to these matters, there is no indication given of what will become of the US$60 million when it is received. This represents a substantial part of Bridge Oil's consolidated assets. No information is given which would enable a potential acceptor to determine what use will be made of this sum. For instance, the intention may be to repay capital or it may be that the appellant has some other use for the money in mind.

In Samic Ltd v Metals Exploration Ltd (1993) 60 SASR 300, a decision of the Full Court of the Supreme Court of South Australia, King CJ said (at 303) that the mandatory requirements imposed by s 750 were to be understood and applied so as to give effect to the policy underlying the takeover provisions of the Corporations Law as expressed in s 731, namely the desirability of ensuring that the acquisition of shares in companies takes place in an efficient, competitive and informed market. His Honour said (in a sentence which I regard as quite fundamental) that the object was to put shareholders in possession of the information required to enable them to make an informed and critical assessment of the offer and an informed decision whether to accept it. Later his Honour said (at 303):

It was important to Samic shareholders to be aware of the true nature of the group's takeover activities and MEX's intentions with respect to the Samic cash assets. This information could well affect the shareholders' assessment of whether MEX was likely to improve its offer, the prospects of a competing offer and the prospects of the shares, if retained, in the company under new management. It would assist shareholders to assess critically the attractiveness or otherwise of an offer of 45 cents for shares with a cash asset backing of 52 cents.

I should perhaps mention that Samic was a case dealing with a Pt C statement, not a Pt A statement, but what King CJ has said in the two passages to which I have referred is as relevant for Pt A statements as it is for Pt C statements. It is perhaps unnecessary to add that I am in respectful agreement with what his Honour has written.

In my opinion, a reader of the Pt A statement in this case is not being informed sufficiently of the appellant's intentions. The absence of information, which I think I should infer must exist, may put a shareholder contemplating acceptance of the offer at a significant disadvantage because he is not told of the precise nature of what is intended and, importantly, of what is to happen to the US$60 million. It is true that, upon the hypothesis that the appellant will acquire the whole of the shares in Bridge Oil, the acceptor is unlikely to be interested in any financial or commercial way in the outcome of the projected sale, but further particularisation and an indication of the ultimate destination or use of the money would give him an idea of how important the acquisition was to the appellant. It would better enable him to gauge the likelihood or otherwise of his being able to gain an increased offer by refusing acceptance for the time being. It is a question of being given full and sufficient information to make a judgment concerning how valuable the acquisition will be to the appellant and thus of making an informed assessment of whether the appellant may be prepared to pay more for the shares than its offer suggests.

I think, therefore, that the paragraph to which I have referred offends cl 20. I also think that it offends cl 17 which requires the Pt A statement to set out any other information material to the making of a decision by an offeree whether or not to accept an offer.

It is for these reasons that I considered that the appeal should be dismissed. There are some further matters to which I should, however, refer. The first of these concerns the future of employees. This is the matter specifically addressed by cl 20(1)(c) of s 750 of the Law. The matter is dealt with in para 15.2(c) of the Pt A statement. It says that it is the appellant's intention to continue the future employment of the present employees of Bridge Oil and its subsidiaries. But para 15.2 is subject to para 15.1. Paragraph 15.1 contemplates the disposal of the non-United States operations and also of some of the United States operations. If this were to occur, it would follow that the employment of numbers of employees would be likely to be adversely affected.

Paragraph 15.1 does not say what the appellant's intention in relation to these employees is except to the extent that it refers to what is to happen in relation to the employees described as ''the executive group''. These are not referred to in detail but one's attention is directed to para 4.2 of the Pt A statement. In my opinion, the information there given provides a sufficient indication of the appellant's intentions in relation to the executive group. I agree with his Honour that the statement concerning Mr Fenton is vague but his Honour thought that this matter was trivial. I respectfully agree.

The position of some employees other than the members of the executive group is dealt with in cl 17(d). The employees are those of the United States subsidiary. I do not refer to the detail of it. It is enough to say that I think it provides sufficient indication of the appellant's intention in relation to those employees. The paragraph recognises that, if the appellant is able to achieve its object of disposing of the South Texas leases, some employees in the United States will or may lose their employment. In that event the severance agreement is to operate.

His Honour thought that para 17(d) did not state what would occur in relation to the employees of the South Texas oil fields with sufficient clarity. With respect, I read para 17(d) as applying to all employees. I see no reason why it is not intended to apply to the employees of the South Texas oil fields.

That leaves the employees of Bridge Oil itself. In the main, these are the Australian employees although perhaps not entirely so. There is no express statement dealing with the appellant's intention in relation to these employees other than the one made in para 15.2(c). But, as earlier said, para 15.1 makes it clear that the appellant's preferred option is to dispose of the Australian operations. Termination of the employment of numbers of employees would seem to be the likely consequence if that were to occur albeit that it may never occur or may not occur for some considerable time. Although there is no express statement about the matter made in the Pt A statement, the clear inference must be that employees whose employment is terminated will be left to such remedies as they have under the general law. Some of them may have riqhts under the common law; others may be covered by Commonwealth or State industrial legislation. The point I make is that the silence of the statement about the matter does not, in my opinion, warrant the conclusion that there is no indication of the appellant's intention about the matter. The only inference which can be drawn is that the general law is to apply. The important thing, from the point of view of a shareholder considering the offer, is that he is informed of the intention eventually to dispose of the Australian operations and of the special arrangements made in relation to the United States employees including the members of the executive group.

It follows that I am of opinion that the appellant was not in breach of cl 20(1)(c) of s 750 of the Law.

There is another matter relating to the position of the executive group with which I should, however, deal. It was raised by notice of contention relied upon by the respondent. The submission depends upon the provisions of s 698(2) of the Law which provides that, subject to subs (5), a person who proposes to send takeover offers within the next following four months, or an associate of such a person, shall not give, offer to give or agree to give to a person whose shares may be acquired under the takeover scheme, or to an associate of such a person, any benefit that the proposed offeror is not proposing to provide for under the takeover offers. Section 698(5) is not relevant for present purposes.

In support of the submission, counsel for the respondent said that no other shareholder (ie no shareholders other than the members of the executive group) of Bridge Oil Ltd was offered any opportunity to acquire any shares in the appellant or to obtain employment or retirement benefits from it under the takeover scheme or offer. Reliance was placed on the decision of the High Court in Sagasco Amadeus Pty Ltd v Magellan Petroleum Australia Ltd (1993) 177 CLR 508 at 515-16 ; 113 ALR 23.

In my opinion, the submission should be rejected. I do not regard the benefit intended to be conferred on the executive group as a benefit of a kind contemplated by s 698. The section contemplates a situation in which benefits conferred on some shareholders are not conferred or not to be conferred on all of them. In my opinion, the contemplation is that the benefit referred to in s 698 is a benefit provided to shareholders in their capacity as owners of shares in the company. That is not so in this case. The benefit which the members of the executive group are intended to have will be conferred on them in their capacity as employees, not shareholders. Accordingly I do not consider that any breach of s 698 of the Law has been established. The decision in Sagasco is distinguishable from the present case for this reason.

It was submitted by counsel for the appellant that, upon the assumption that there was a breach of s 750 of the Law, the case was nevertheless not one for the exercise of the court's discretion in favour of the grant of an injunction. In the view I take of the matter, the breach of cl 20 of s 750 which I have found established is not a trivial or technical one. The absence of the information which I think should have been given is a serious matter. The case is one in which it is appropriate to grant injunctive relief.

During the course of the argument there was discussion of the question whether, the appeal being from the exercise of a discretion, it was shown that his Honour's discretion in any way miscarried. I have reached the conclusion that the appeal should be dismissed for reasons different from those relied upon by his Honour. This may mean that the question of discretion, at least on the view I take of the matter, does arise for this court. Whether that be so or not, I am satisfied that the case is one where an injunction should go.

I should also make reference to ss 739 and 743. I have reservations whether s 739 could be applicable to the circumstances of this case. Section

743 provides that, where a person has contravened a provision of Ch 6 of the Law, in which s 750 is to be found, and the court is satisfied that, in all the circumstances the contravention ought to be excused, the court may make an order declaring, inter alia, any document not be invalid because of the contravention.

It was suggested by counsel for the appellant that we should consider making an order under s 743. I am not disposed to take this course. If such an application is to be pursued, I think it should be made by a substantive application to a judge of the court. If it were made, it would be unlikely to succeed unless it were supported by appropriate evidence. But even assuming that it were, there might well be a question whether the breach was one which in all the circumstances ought to be excused. The answer to that question would no doubt depend on what the evidence established and the court's then view of the possible consequences of the breach.

Before I conclude these reasons, there is one further matter that I should mention. The provisions of s 750 are important. Compliance with them tends to ensure that the principles (the Eggleston principles) provided for in s 731 are observed. An informed market and the affording of equal opportunity to all shareholders are of critical importance. But the opening words of s 731 also refer to the desirability of ensuring that the acquisition of shares in companies takes place in an efficient and competitive market as well as in an informed one. Pronouncing on questions whether a Pt A statement is in breach of s 750 or of other provisions of the Law is a responsible task. It is often a difficult one and thus one upon which minds will differ. The party complaining of a breach of the provisions will not infrequently be a competitor for the shares in question. Tactically the object is to take the other competitor out of the market. Hence the Pt A statements of competing bidders are gone through with toothcombs in the hope of finding something which will enable a competitor's bid to be stopped or delayed. Undoubtedly this tends to serve the public interest which there is in there being an informed market. In the same way as s 52 of the Trade Practices Act 1974 (Cth) tends to foster fair competition and accurate information being provided to consumers of goods and services, so the provisions of s 750 and some other sections tend to have a similar effect in relation to takeover offers for shares in companies. But a consequence of this is that the stopping of one bid will tend to close the market down. It may then consist only of one bidder. Thus the public interest which there is in a competitive market is adversely affected. It is true that not all shareholders are primarily or entirely concerned with price. But many are. Some -- I instance superannuation funds -- may be under a duty to their members to put it to the forefront. The taking of a player out of the market is likely to affect the ultimate price to be obtained for the shares particularly in cases where the directors and the majority of shareholders appear to accept that the reality of a particular situation is that their shares will probably be acquired. This appears to be a case of that kind.

No doubt the presence of ss 739 and 743 of the Law, which enable the court to relieve a party against breaches of the Law in appropriate circumstances, enable the problem to be overcome in numbers of cases. But unless that is so, it does seem to me that a court asked to restrain the making of an offer needs to be astute to see that the breach of the Law relied upon is real and of substance. Otherwise there is a risk that the public interest which there is in a competitive market will suffer. That should not occur unless it is tolerably clear that the breach of s 750 which is alleged to have occurred does involve the withholding of relevant information from shareholders.

Be that as it may, it is my opinion, for the reasons I have given, that this is a case where the provisions of s 750 have been infringed. It is a case in which it was appropriate to grant an injunction in terms of that ordered by the primary judge. The appropriate course for this court to take was to dismiss the appeal, albeit, in my opinion, for reasons somewhat different from those relied upon by the primary judge.